Guest Blogger

Window collapse came with staggering debt

Filed By Guest Blogger | November 23, 2009 6:30 PM | comments

Filed in: Media, Politics
Tags: bankruptcy, gay press, LGBT press, South Florida Blade, Southern Voice, Unite Media, Washington Blade, Windows Media

Editors' Note: Guest blogger Matt Hennie, a product of the legacy media, both gay and otherwise, launched Project Q Atlanta to cover LGBT Atlanta in September 2008.

hennie_headshot.jpgLike a one-two punch only a heavyweight fighter can deliver, gay news consumers in three cities were first hit with the news that Window Media and Unite Media abruptly closed. A week later, there's this: The gay pubs they loved for their weekly fix of news and information were so financially troubled that they collapsed under the weight of $15.35 million in debt.

Welcome to bankruptcy court, dear friends. Now you know we've really made it when LGBT publications can share the headlines that have announced the death of scores of other newspapers in the last year.

The collapse of the two companies that published the storied Washington Blade, Southern Voice, South Florida Blade, 411 and David magazine isn't surprising. The companies have been in federal receivership for more than a year.

But what's shocking is the sudden collapse. Sudden as in change-the-locks-overnight kind of sudden, locking out employees and shorting them a month's pay. Dig into the bankruptcy filings, though, and you get some sense of what forced the hands of company executives.

The petitions for Chapter 7 bankruptcy – that's the kind that means liquidation, not reorganization – were filed in federal court Friday in Atlanta. Some 403 creditors are owed more than $15.35 million by Window and Unite. It's a staggering amount that touches all facets of their business.

Window lists claims of nearly $7.85 million to 277 secured and unsecured creditors, while Unite's claims include $7.5 million to 126 creditors. Combined, the companies owe $1.04 million in payroll and other taxes to federal, state and local agencies; $418,189 to printers in several states; $168,109 in rent in Atlanta, Fort Lauderdale and Washington, D.C.; $71,798 to distributors of the former publications; and $4,500 to two companies providing health insurance.

Window and Unite each list two New York-based creditors with secured claims. Avalon Equity Funding and M&T Bank hold claims of $4.97 million and $1.28 million, respectively, or $6.25 million from Window. A New York company named Avalone and M&T Bank hold identical claims of $4.97 million and $1.28 million, respectively, or $6.25 million from Unite. Claims from the three businesses include "all assets, equipments, account receivables, inventory, etc."

It's not clear from the filings if the identical amounts of $6.25 million listed by Window and Unite are the same debt, or if it's money that was split equally between the two companies. That may get explained when court hearings begin Dec. 7.

Avalon is the venture capital fund that owned Window and Unite, investing more than $7 million in SBA funds into the publishers that the federal agency says it has no hopes of recovering. The relationship between the gay publishers and Avalon dates to 2001, when the firm invested in Window to help it purchase the Washington Blade and the New York Blade, which closed earlier this year.

At the time, Window pairing with Avalon was the partnership that made possible the joining of Southern Voice and the Washington Blade into one company. For those inside the newsrooms – and I was there as editor of SoVo – it provided a huge boost in resources by bringing together two top-notch reporting staffs that benefited readerships of both papers. In hindsight, it turned out to be a deal with the devil that sank both publications and others, too.

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What was Chris Crain's relationship to all of this? I know he was the editor of the Washington Blade and ran it into the ground, but wasn't he a part owner at some point too?

Where did all this debt come from? Was it just to keep paying the bills, or were they expanding rapidly into other ventures at some point?

They took out too much debt to try to make rapid acquisitions that didn't pan out. While Chris Crain is a douche, I don't think he ran the Blade into the ground, really, because they were still certainly the most profitable of all of the businesses. The Financial mess was the problem of the parent company, and not so much the outlets. Window was trying to create a big, LGBT media giant. After seeing this, any further consolidation in LGBT media makes me nervous. Local ownership and control is the answer. It is what will weather the storm.

It has been alleged elsewhere that the court appointed receiver (since last February?) failed to act to authorize sale of the Blade after bids were received from two parties (the Blade staff and the gay publisher of a local weekly paper in Falls Church, VA).

Can this be confirmed? Was the final blow for the Blade due to the failure of the owning companies or aided and abetted by someone at SBA being asleep at the switch? Let's get paranoid. Was this inaction deliberate by some bigoted junior staffer at SBA? "Inquiring minds want to know!!!!!"

In any case, the DC Agenda under the former Blade staff will carry on without the burden of this debt, which is like being reborn as something new that may grow into something new and better.

We wish them all well and praise them for boldly and defiantly maintaining the publication schedule, working under such merciless constraints.

I concur with the author's observation that Window Media's purchase of the Blade in the first place "turned out to be a deal with the devil that sank both publications and others, too."

It was not long after that bad spark in a dry barn, as my grandmother would say, that a now-notable author discovered serious questions, and wrote of them in the Washington City Paper. With Window, past was to become prologue. It is a reveling read, and helps to address some commenter' questions about who was involved how: